ForexSP Reviews, Forex’s Clearing and Settlement Policies: Although clearing and settlement is a very theoretical subject, it is important to understand the process behind it.
As a trader or investor, you do not have to worry about how clear or settled your deal is, because a good intermediary means that the agent is working and you do not even know this.
But if you do not understand this, then your information will be incomplete, so we will try to understand what happens from buying shares to your Demat account.
ForexSP Reviews, What happens when you buy shares?
Share means part. The market is the place where you can buy and sell. In a literal sense, the stock market is a place to buy and sell a stake in a listed company. Day 1 / First Day – Day of Deal (T Day), Monday
Day 1 / First Day – Day of Deal (T Day), Monday
Suppose you bought 100 shares of Reliance Industries for Rs 1000 on 23 June 2014 (Monday). The total value of your deal is 1 lakh rupees (100 * 1000). The day you make this deal is called Trade Day or T Day.
By the end of the day, your broker will take one lakh rupees and whatever fees, he will take from you. Suppose you made this deal on Zerodha, then you have to pay the following fees or charges:
Then you have to pay a fee of Rs 103.93 along with one lakh rupees, that is, a total amount of Rs 100,103.93 will be withdrawn from your trading account. Remember that the money has gone out, but the shares have not yet come to your Demat account.
On the same day, the broker prepares a contract note for you and sends a copy to you. This note is a kind of bill, which gives complete information about your dealings.
This is an important document and comes in the future. The contract note usually gives all the trades done on that day along with their Trade Reference Number. Also, it has information about all fees charged to you.
Day 2 / Second Day – Trade Day + 1 (T + Day), Tuesday
The next day of the day you deal is called T + 1 Day. On T + 1 day you can sell your shares, which you bought on the previous day. Such a deal is called BTST-Buy Today, Sell Tomorrow or ATST-Acquire Today, Sell Tomorrow. Remember that the shares have not yet entered your Demat account.
This means that you are selling such shares, which have not happened to you yet. There is a risk in this. Although not every BTST deal is risky, but if you are dealing with B Group shares or shares that are very low in buy and sell, then you can get into trouble. Let us leave this whole issue here.
If you are new to the market, then it would be better for you to stay away from BTST because you do not fully know its risk.
Apart from this, T + 1 day is not very important from your perspective, although the money and all fees paid to buy shares are reaching the right place.
Day 3 / Third Day – Trade Day + 2 (T + 2 Day), Wednesday
On the third day, ie T + 2 day, at around 11 in the day, the person who has sold you shares comes out of your account and comes to your broker’s account, and the broker sends the same stock to your account by evening.
Similarly, the money that came out of your account goes to the account of the person who sold the shares to you. Now the shares will appear in your Demat account.
You will now have 100 shares of Reliance. In this way, shares purchased on T Day will come to your account on T + 2 Day and will be able to deal with them again on T + 3 Day.
What happens when you sell shares?
The day you sell shares is called Trade Day, and it is called T Day. As many shares are sold, as many shares get blocked in your Demat account. These shares are given to the exchange before T + 2 Day and on T + 2 Day, the money, fees and charges from the sale of those shares are deducted and come to your account.
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